EX-99.2 3 q32024992.htm EX-99.2
Exhibit 99.2
Reported Consolidated Results
ZILLOW GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, unaudited)

| September 30, 2024 |  | December 31, 2023
Assets |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 1,072 |  |  | $ | 1,492 |
Short-term investments | 1,101 |  |  | 1,318 |
Accounts receivable, net | 117 |  |  | 96 |
Mortgage loans held for sale | 164 |  |  | 100 |
Prepaid expenses and other current assets | 212 |  |  | 140 |
Restricted cash | 3 |  |  | 3 |
Total current assets | 2,669 |  |  | 3,149 |
Contract cost assets | 24 |  |  | 23 |
Property and equipment, net | 356 |  |  | 328 |
Right of use assets | 61 |  |  | 73 |
Goodwill | 2,818 |  |  | 2,817 |
Intangible assets, net | 211 |  |  | 241 |
Other assets | 20 |  |  | 21 |
Total assets | $ | 6,159 |  |  | $ | 6,652 |
Liabilities and shareholders’ equity |  |  |
Current liabilities: |  |  |
Accounts payable | $ | 53 |  |  | $ | 28 |
Accrued expenses and other current liabilities | 114 |  |  | 107 |
Accrued compensation and benefits | 49 |  |  | 47 |
Borrowings under credit facilities | 148 |  |  | 93 |
Deferred revenue | 57 |  |  | 52 |
Lease liabilities, current portion | 15 |  |  | 37 |
Convertible senior notes, current portion | 418 |  |  | 607 |
Total current liabilities | 854 |  |  | 971 |
Lease liabilities, net of current portion | 86 |  |  | 95 |
Convertible senior notes, net of current portion | 497 |  |  | 1,000 |
Other long-term liabilities | 66 |  |  | 60 |
Total liabilities | 1,503 |  |  | 2,126 |
Shareholders’ equity: |  |  |
Class A common stock | — |  |  | — |
Class B common stock | — |  |  | — |
Class C capital stock | — |  |  | — |
Additional paid-in capital | 6,482 |  |  | 6,301 |
Accumulated other comprehensive income (loss) | 4 |  |  | (5) |
Accumulated deficit | (1,830) |  |  | (1,770) |
Total shareholders’ equity | 4,656 |  |  | 4,526 |
Total liabilities and shareholders’ equity | $ | 6,159 |  |  | $ | 6,652 |

ZILLOW GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except share data, which are presented in thousands, and per share data, unaudited)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Revenue | $ | 581 |  |  | $ | 496 |  |  | $ | 1,682 |  |  | $ | 1,471 |
Cost of revenue (1) | 140 |  |  | 110 |  |  | 393 |  |  | 306 |
Gross profit | 441 |  |  | 386 |  |  | 1,289 |  |  | 1,165 |
Operating expenses: |  |  |  |  |  |  |
Sales and marketing (1) | 217 |  |  | 164 |  |  | 588 |  |  | 493 |
Technology and development (1) | 145 |  |  | 142 |  |  | 436 |  |  | 419 |
General and administrative (1) | 123 |  |  | 131 |  |  | 386 |  |  | 407 |
Impairment and restructuring costs | — |  |  | 1 |  |  | 6 |  |  | 9 |
Acquisition-related costs | 1 |  |  | 1 |  |  | 1 |  |  | 2 |
Total operating expenses | 486 |  |  | 439 |  |  | 1,417 |  |  | 1,330 |
Loss from operations | (45) |  |  | (53) |  |  | (128) |  |  | (165) |
Loss on extinguishment of debt | — |  |  | — |  |  | (1) |  |  | — |
Other income, net | 34 |  |  | 34 |  |  | 101 |  |  | 108 |
Interest expense | (9) |  |  | (9) |  |  | (28) |  |  | (27) |
Loss before income taxes | (20) |  |  | (28) |  |  | (56) |  |  | (84) |
Income tax expense | — |  |  | — |  |  | (4) |  |  | (1) |
Net loss | $ | (20) |  |  | $ | (28) |  |  | $ | (60) |  |  | $ | (85) |
Net loss per share - basic and diluted | $ | (0.08) |  |  | $ | (0.12) |  |  | $ | (0.26) |  |  | $ | (0.36) |
Weighted-average shares outstanding - basic and diluted | 232,521 |  |  | 233,295 |  |  | 233,553 |  |  | 235,560 |
(1) Includes share-based compensation expense as follows: |  |  |  |  |  |  |
Cost of revenue | $ | 3 |  |  | $ | 4 |  |  | $ | 11 |  |  | $ | 12 |
Sales and marketing | 19 |  |  | 18 |  |  | 57 |  |  | 53 |
Technology and development | 40 |  |  | 42 |  |  | 124 |  |  | 123 |
General and administrative | 46 |  |  | 45 |  |  | 137 |  |  | 154 |
Total share-based compensation | $ | 108 |  |  | $ | 109 |  |  | $ | 329 |  |  | $ | 342 |
Adjusted EBITDA (2) | $ | 127 |  |  | $ | 107 |  |  | $ | 386 |  |  | $ | 322 |
(2) Adjusted EBITDA is a non-GAAP financial measure; it is not calculated or presented in accordance with U.S. generally accepted accounting principles, or GAAP. See Exhibit 99.1 for more information regarding our presentation of Adjusted EBITDA and for a reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure, for each of the periods presented.

ZILLOW GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions, unaudited)

| Nine Months Ended September 30,
| 2024 |  | 2023
Operating activities |  |  |
Net loss | $ | (60) |  |  | $ | (85) |
Adjustments to reconcile net loss to net cash provided by operating activities: |  |  |
Depreciation and amortization | 178 |  |  | 134 |
Share-based compensation | 329 |  |  | 342 |
Amortization of right of use assets | 8 |  |  | 18 |
Amortization of contract cost assets | 14 |  |  | 16 |
Amortization of debt issuance costs | 4 |  |  | 4 |
Impairment costs | 6 |  |  | 6 |
Accretion of bond discount | (23) |  |  | (29) |
Other adjustments to reconcile net loss to net cash provided by operating activities | 14 |  |  | (3) |
Changes in operating assets and liabilities: |  |  |
Accounts receivable | (21) |  |  | (26) |
Mortgage loans held for sale | (64) |  |  | (55) |
Prepaid expenses and other assets | (73) |  |  | (22) |
Contract cost assets | (15) |  |  | (16) |
Lease liabilities | (31) |  |  | (24) |
Accounts payable | 25 |  |  | 7 |
Accrued expenses and other current liabilities | 8 |  |  | (3) |
Accrued compensation and benefits | 2 |  |  | 4 |
Deferred revenue | 5 |  |  | 4 |
Other long-term liabilities | — |  |  | (4) |
Net cash provided by operating activities | 306 |  |  | 268 |
Investing activities |  |  |
Proceeds from maturities of investments | 906 |  |  | 1,136 |
Proceeds from sales of investments | 13 |  |  | — |
Purchases of investments | (668) |  |  | (638) |
Purchases of property and equipment | (109) |  |  | (101) |
Purchases of intangible assets | (21) |  |  | (24) |
Cash paid for acquisitions, net | — |  |  | (34) |
Net cash provided by investing activities | 121 |  |  | 339 |
Financing activities |  |  |
Net borrowings on warehouse line of credit and repurchase agreements | 55 |  |  | 54 |
Repurchases of Class A common stock and Class C capital stock | (301) |  |  | (336) |
Settlement of long-term debt | (697) |  |  | — |
Proceeds from exercise of stock options | 96 |  |  | 56 |
Net cash used in financing activities | (847) |  |  | (226) |
Net increase (decrease) in cash, cash equivalents and restricted cash during period | (420) |  |  | 381 |
Cash, cash equivalents and restricted cash at beginning of period | 1,495 |  |  | 1,468 |
Cash, cash equivalents and restricted cash at end of period | $ | 1,075 |  |  | $ | 1,849 |
Supplemental disclosures of cash flow information |  |  |
Noncash transactions: |  |  |
Capitalized share-based compensation | $ | 56 |  |  | $ | 56 |
Write-off of fully depreciated property and equipment | 63 |  |  | 29 |
Write-off of fully amortized intangible assets | 21 |  |  | 4 |
Value of Class C capital stock issued in connection with an acquisition | — |  |  | 20 |

Non-GAAP Net Income per Share
Our presentation of non-GAAP net income per share excludes the impact of the results of share-based compensation, impairment and restructuring costs, acquisition-related costs, loss on extinguishment of debt and income taxes. This measure is not a key metric used by our management or board of directors to measure operating performance or otherwise manage the business. However, we provide non-GAAP net income per share as supplemental information to investors, as we believe the exclusion of the results of share-based compensation, impairment and restructuring costs, acquisition-related costs, loss on extinguishment of debt and income taxes facilitates investors’ operating performance comparisons on a period-to-period basis. You should not consider non-GAAP net income per share in isolation or as a substitute for analysis of our results as reported under GAAP.
The following table sets forth a reconciliation of non-GAAP net income, adjusted, to net loss, as reported on a GAAP basis, and the calculation of non-GAAP net income per share - basic and diluted, for each of the periods presented (in millions, except share data, which are presented in thousands, and per share data, unaudited):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Net loss, as reported | $ | (20) |  |  | $ | (28) |  |  | $ | (60) |  |  | $ | (85) |
Share-based compensation | 108 |  |  | 109 |  |  | 329 |  |  | 342 |
Impairment and restructuring costs | — |  |  | 1 |  |  | 6 |  |  | 9 |
Acquisition-related costs | 1 |  |  | 1 |  |  | 1 |  |  | 2 |
Loss on extinguishment of debt | — |  |  | — |  |  | 1 |  |  | — |
Income taxes | — |  |  | — |  |  | 4 |  |  | 1 |
Net income, adjusted | $ | 89 |  |  | $ | 83 |  |  | $ | 281 |  |  | $ | 269 |
Non-GAAP net income per share: |  |  |  |  |  |  |
Basic | $ | 0.38 |  |  | $ | 0.36 |  |  | $ | 1.19 |  |  | $ | 1.15 |
Diluted | $ | 0.35 |  |  | $ | 0.33 |  |  | $ | 1.10 |  |  | $ | 1.06 |
Weighted-average shares outstanding: |  |  |  |  |  |  |
Basic | 232,521 |  |  | 233,295 |  |  | 233,553 |  |  | 235,560 |
Diluted | 258,994 |  |  | 264,866 |  |  | 262,180 |  |  | 265,451 |

Diluted non-GAAP net income per share for the periods presented is calculated using diluted weighted-average shares outstanding, which includes potential shares of Class C capital stock for the periods in which their effect would have been dilutive. The potential shares of Class C capital stock were excluded from the calculation of non-GAAP net income per share for certain periods presented if their effect would have been antidilutive. The following table reconciles the denominators used in the basic and diluted non-GAAP net income per share calculations (in thousands, unaudited):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Denominator for basic calculation | 232,521 |  |  | 233,295 |  |  | 233,553 |  |  | 235,560 |
Effect of dilutive securities: |  |  |  |  |  |  |
Option awards | 3,303 |  |  | 2,563 |  |  | 2,619 |  |  | 1,872 |
Unvested restricted stock units | 2,131 |  |  | 3,562 |  |  | 2,093 |  |  | 2,573 |
Convertible senior notes due in 2024 and 2026 | 21,039 |  |  | 25,446 |  |  | 23,915 |  |  | 25,446 |
Denominator for dilutive calculation | 258,994 |  |  | 264,866 |  |  | 262,180 |  |  | 265,451 |

Key Metrics
The following table presents our visits and average monthly unique users for the periods presented (in millions, except percentages), recast for prior periods, as described in our Form 10-Q for the quarterly period ended September 30, 2024:

| Three Months Ended September 30, |  | 2023 to 2024 % Change |  | Nine Months Ended September 30, |  | 2023 to 2024 % Change
| 2024 |  | 2023 |  |  | 2024 |  | 2023 |
Visits (1) | 2,440 |  |  | 2,366 |  |  | 3% |  | 7,251 |  | 6,995 |  | 4%
Average monthly unique users (2) | 233 |  |  | 230 |  |  | 1% |  | 227 |  |  | 226 |  |  | —%
(1) Visits includes groups of interactions by users with the Zillow, Trulia and StreetEasy mobile apps and websites. Zillow and StreetEasy measure visits with an internal measurement tool and Trulia measures visits with Adobe Analytics.
(2) Zillow, StreetEasy and HotPads measure unique users with an internal measurement tool and Trulia measures unique users with Adobe Analytics.

The following table presents loan origination volume by purpose and in total for Zillow Home Loans for the periods presented (in millions, except percentages):

| Three Months Ended September 30, |  | 2023 to 2024 % Change |  | Nine Months Ended September 30, |  | 2023 to 2024 % Change
| 2024 |  | 2023 |  |  | 2024 |  | 2023 |
Purchase loan origination volume | $ | 812 |  |  | $ | 452 |  |  | 80% |  | $ | 2,169 |  |  | $ | 1,047 |  |  | 107%
Refinance loan origination volume | 7 |  |  | 5 |  |  | 40% |  | 14 |  |  | 12 |  |  | 17%
Total loan origination volume | $ | 819 |  |  | $ | 457 |  |  | 79% |  | $ | 2,183 |  |  | $ | 1,059 |  |  | 106%